International Businesses Focusing on Cambodia’s Labor Situation

By William E. Todd, U.S ambassador to Cambodia

As the ongoing political impasse continues to weigh heavily on everyone’s minds, I was pleased to learn that the Cambodian People’s Party and the Cambodia National Rescue Party agreed last week on initial steps to pursue reform of the country’s electoral system.  Efforts to establish a joint committee to develop recommendations for reforms, in consultation with civil society and the general public, are a positive step forward, and I am hopeful that further progress is on the horizon.

Another long-term concern of many people is the ongoing labor dispute over the minimum wage in Cambodia’s garment sector.  Last week, representatives from major global brands that purchase garments and footwear produced in Cambodia met with government officials to discuss their concerns regarding this issue as well as with last month’s violent clashes between striking garment factory workers and government security forces.  The extensive media coverage of this meeting prompted a young Cambodian named Mony to ask, “Will the negative attention on labor unrest in Cambodia be bad for business?”

While negative publicity about the labor situation in Cambodia is certainly bad for the country’s image in the short-term, international investors would certainly respond positively in the longer-term if the issues were addressed in a fair and transparent manner that strengthened respect for the rights, safety, and welfare of workers.  The visit by representatives of some of the world’s most famous clothing brands was a strong signal that Cambodia’s labor situation is attracting world attention, and now is the time for the Cambodian government to take action.  After sending an open letter to Prime Minister Hun Sen last month, the global brands decided to visit Cambodia because the reputation of their businesses depends on a resolution of the current labor unrest.  Keys issues that must be addressed are the ongoing calls for a fair minimum wage, enacting trade-union legislation that meets international standards, and ensuring due process and humane treatment for the 21 factory workers and labor activists who have been detained since January 2-3.

Recently, spurious concerns have been raised about the legitimacy of garment workers’ right to strike, but legal experts and the International Labor Organization have made it clear that the right to strike is guaranteed by Cambodia’s constitution and labor laws and by international conventions that Cambodia has signed.  When former Secretary of State Hillary Clinton visited Siem Reap in 2012, she said, “The international community and international law recognize that workers everywhere, regardless of income or status, are entitled to certain universal rights, including the right to form and join a union and to bargain collectively.” Freedom of association, as well as collective bargaining and representation, are fundamental to achieving equitable growth that supports workers and the middle class.  I truly believe this freedom is not only essential to Cambodia’s economic growth and prosperity, but also to its democracy.  Therefore, I continue to urge the government to lift the ban on demonstrations and uphold Cambodian citizens’ constitutionally guaranteed freedoms of peaceful assembly, expression, and association.  

During a lunch hosted by the American Chamber of Commerce last week, I had the honor to introduce the new Minister of Commerce, His Excellency Sun Chanthol.  Senior Minister Chanthol understands that labor conditions are a critical consideration for international firms looking to invest in Cambodia, especially for companies that demand worker safety, decent wages, and good working conditions as a condition for investment.  These are exactly the kind of reputable companies that Cambodia needs to attract in order to continue building its middle class.  

Senior Minister Chanthol has also expressed a need for Cambodia to bolster its “brand” by having the country set the standard in the region for best labor practices, not just meeting the minimum standards of its competitors.  For example, Minister Chanthol was instrumental in expediting approval of an agreement enabling the U.S.-supported Better Factories Cambodia program to continue factory inspections to ensure that manufacturers adhere to Cambodian law and international labor standards.  The new agreement also allows the Better Factories Cambodia program to make public portions of its reports on factories that are deficient in adhering to safety and labor standards.  The inspections and public disclosure website will be powerful tools for increasing transparency and making Cambodia a more attractive place for international brands to do business.

The international garment brands that were here last week made it clear that they want to work with the government and factories to improve Cambodia’s labor environment, and I urge the government and industry to make good use of this offer.  By working together, Cambodia can live up to its potential for becoming a top destination for international investment.  Rather than fearing the recent global spotlight on Cambodia, all concerned should embrace it is an opportunity to improve the labor and business environment, which is a vital step in creating more jobs and expanding the middle class.  

Thank you very much for giving me this opportunity to answer your important questions.  Please continue to send me your questions at AskAMBToddPP@state.gov and leave comments on my blog at http://blogs.usembassy.gov/todd.   

William E. Todd is U.S. Ambassador to the Kingdom of Cambodia